If undertaking a university or college level course in a business related area, it is likely that at some point the candidate will be required to write a fictitious business plan or proposal. Writing a business plan is not in itself a difficult process however, in order to be successful, knowledge of what to include and good research are prerequisites.
What is a Business Plan?
Business plans are often seen as a check box exercise, something that must be done to satisfy the needs of investors, such as a bank or other lender. Taking this approach towards a business plan will inevitably lead to the production of a poor quality document, with little relevance.
A good business plan should be seen as a “working document”, a resource that may be used both internally and for presentation to external stakeholders. For the internal user, a business plan should be a source of inspiration, indicating why the business exists and what the businesses mission is. For the external stakeholder the document should broadly indicate, what makes the said business distinct from another and how the business will make a profit in both the long and short term.
How to Write a Business Plan
The first element to consider is that of research. In writing a good business plan there is no substitute for proper research, this is especially true of the financial sections. Many business plans are criticised for “pulling figures out of the air”, to give the business plan credibility one should try to obtain as many realistic figures as possible, indicating were such figures came from.
The second element to consider is that of audience. In writing a real life business plan, one would probably tailor the document to the needs of a specific stakeholder. For the academic business plan, a general approach should be taken. As such, one may assume that the document should be written in standard business English, in the third person, yet not especially tailored to any specific stakeholder.
What to Include in a Business Plan
Business plans are not necessarily a standardised document however, the following elements are included in most business plans and will give a good generalised business plan template.
Executive summary – This is a short punchy roundup of the whole report. It is essential that this section is interesting and relevant, this is the section that will see the reader decide if they wish to read the rest of the business plan.
Business opportunity – This is a section which will highlight to the reader what the perceived business opportunity is, in short the section should include what the business plans to sell and to whom.
Marketing and sales strategy – This is first of the detailed sections. Here the section should indicate, what will distinguish and differentiate the proposed business from others already operating within the sector. Here the business plan should consider issues including, competitor analysis, generic strategies, market segmentation and specific sales strategies.
Management team and personnel – This section will give a round up of the credentials of each of the key members of the prospective business. Here one should include the key achievements and experiences of those who will hold a key position in the business. This section may be omitted from an academic business plan in many cases.
Operations – This section gives the reader a detailed analysis of how the business will operate on a day to day basis. This section is frequently poorly completed however, it is one of the most critical sections, given that it proves the link between intended strategy and forecasts, with the realities of running a business. Here detailed information should be given on prospective property, capital investments, IT systems as well as processes and practises.
Financial statements – This may be the most critical part of a business plan. Here it is recommended that financial statements should include, a projected cash flow forecast, a trading profit and loss account and a balance sheet. From a time scale perspective, projections should be produced for at least three years, although five years may be preferable. The most important element to consider is credibility, in writing a business plan one must be able to justify were the figures came from.
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